Economics Expert on Product Market (Part 2)

Every business transaction has a cost. The combination of these costs from all sides of a transaction creates “trading friction” in a product market. As a result, middlemen are uniquely positioned to reduce costs for buyers and sellers in order to reduce this friction.

Middlemen who are doing their jobs right are making transactions happen more quickly and simplify processes. Despite the fact that the internet has the lowest transaction costs of any platform, middlemen still play a vital role in delivering products and services. In addition, the internet has lowered transaction costs for middlemen more than anyone else.

The popularity of online product markets is an example of how middlemen have become more common on the internet. For example, Amazon and eBay would not exist without the internet. These companies represent two of the largest “middlemen” in history and being online makes their massive scale possible.

Furthermore, the newest online middlemen like AirBnb and Uber are also able to lower transaction costs for their users. In many cases, they provide a service that would not exist without them. For example, if you are traveling abroad, you would not rent a room from a stranger. With middlemen, you have a trusted service in place to ensure the quality of the space you are renting.


Click here for Part 1

Click here for Part 3

About the speaker
Marina Krakovsky, Economics Expert Member

Marina Krakovsky is a business journalist who specializes in social science and economics. Marina has written several books - including “The Middleman Economy: How Brokers, Agents, Dealers, and Everyday Matchmakers Create Value and Profit.”

Provide your rating for this post
If you liked this post, please use the buttons to the left to share it with a friend or post it on social media. Thank you!

Leave a Reply

Read more

Sorry Silicon Valley, You Don’t Need More Data. You Need a Story.

Why storytelling is a crucial part of the product design experience, and why relying on data isn't enough.

The Secret Weapon Product Teams Can Use to Make Tough Decisions

Ryan Walsh eon why it's important to add one simple question to every design and product decision: Are we building or breaking trust?

Hearing About Accounts, Listening for Segments

Product leadership guru Rich Mironov on how account managers and product manager see the world differently

/ Register for Free

Don’t be left behind in your career. Join a growing community of over 500K Product professionals committed to building great products. Register for FREE today and get access to :

  • All eBooks
  • All Infographics
  • Product Award resources
  • Search for other members

Coming soon for members only: personalized content, engagement, and networking.